Customer Centric Collections

"Strive not to be a success, but rather to be of value" - Albert Einstein

What would happen if instead of concentrating on the immediate goals of reducing bad debt and increasing cash flow, you strive to help others, to help your customers first and foremost? Strive to create value for your customers? If you can have quality interactions with your customers in all areas of your business every time, then the success will follow.

Customer centricity, quite simply, is the act of placing the customer at the centre of everything you do. It is certainly not a new thing, customer centricity before the onslaught of globalisation and widespread use of the internet, happened naturally, often as part of the community in which you lived. You know what we're talking about here; the local grocers, butchers, fish and chip shop owners and bartenders that knew not just your name but your 'usual' order and very probably everything from the name of your first born to how many sugars you take in your tea!

This sort of customer knowledge still exists today in smaller communities but for many of us globalisation, the internet explosion and digitalisation has meant that many companies never set eyes upon their customers, making any interactions they do have with them increasingly important. The effect the internet has had on business over the past 30 years is mind blowing; according to Cisco analysis (1)*, in 2012, 8.7 billion devices were connected to the Internet. In 2020, that number is expected to soar to 50 billion. More and more transactions are digital negating the need for face to face interactions and competition is rife, making it harder to build loyalty amongst customers.

And yet....with the rise of corporate social responsibility, customers are expecting and demanding much greater customer experiences than they ever have. As Sheryl Connelly, Ford's in-house futurist notes from Ford's 2017 Global Trends Report (2)*, the need to belong to a community is strong all around the globe, and people expect businesses to play a role in that community and give back. In fact, 88% of women and 83% of men are more likely to support companies that prioritise purpose over profit according to the report. What's more, in the absence of a less than favourable experience, they are more than willing to take to social media to share their negative experience before taking their business elsewhere.

With this insatiable need for great customer experiences, people are willing to pay more to achieve this and according to research conducted by Deloitte and Touche in 2015 (3)*, customer centric companies were found to be 60% more profitable compared to companies that were not focused on the customer. Compelling evidence, but most companies make the mistake of applying customer centricity to their frontline activities and forget about the back office, support and head office functions. To truly have the customer at the core of your business this model has to apply to each customer touch point and as such, collections can play a pivotal role in this approach.

So exactly how can customer centricity be applied in a collections environment?Remember first and foremost, that your frontline staff are the face of your business and invest in them. Many companies now refer to a 'relationship hub' rather than the traditional call centre where agents are multi-skilled and have insight into the holistic file of a customer including any products/services they utilise and full payment history. This creates a full customer experience where a customer may call up to discuss a new product or service and at the same time as addressing this query, the agent is then able to remind the customer that actually they currently have an amount owing on their account about to fall overdue, would they like to settle that now? This sort of interaction makes it far easier for the customer to have one contact point to discuss all queries and portrays a real sense of customer knowledge.

Remember to PLEASE your customers and PLEASE your business by structuring your collections processes around the requirements of the customer......

So let's look at each of these requirements in a little more detail.......

ProtectProtect your customer from spiralling debt and in turn protect your brand encouraging repeat business and referrals. How do you stop debt getting out of control for your customer?

 Make sure you communicate clearly what your payment terms are. Set up reminders before the debt becomes overdue. SMS/Email/Integrated Voice Recording Campaign reminders can provide cost effective methods of recouping debt at an early stage in the collection cycle. Often at a reminder stage customers just require the ability to self-serve, so automated options work well and can be less intimidating. Apply credit scoring where applicable. Segment your customers according to your perceived ability for them to pay and apply tailored workflows to each segment.

ListenIn this modern environment, it is often easy to forget the value of talking to customers and truly understanding their requirements. So what makes a good listener? Empathy – Employees that are in regular contact with customers should have the ability to empathise and care about the customers' situation. Only then should they attempt to come up with a suitable solution. Open mind – No employee should enter a conversation with a customer with preconceived ideas about what the customer is going to say. Typically within a collections department this is easier said than done as generally seasoned accounts receivable staff would have, over their lifetime, heard every possible excuse for not paying a bill on time. However, to enter a conversation with a negative mindset will influence the outcome of the call. Each customer should be given the benefit of the doubt and listened to properly with an open mind. Ensure that agents handling calls are appropriately skilled and, within certain guidelines of course, are able to take ownership of the call. Strict adherence to scripting does not allow employees to actively listen and suitably respond, and will not make for a great customer experience.

Engage87% of the world's population use mobile devices and here within Australia there are more smartphones than people. If you don't have digital communication options to engage your customer then you will get left behind. What are the new and emerging ways to engage your customer?

Automated self-service options Online Portals enable customers to pay their bills, access account details, print off statements and communicate in a less intimidating and more convenient way 24/7. QR links on letters or in SMS/Email communication enable your customer to easily access your online system and to communicate regarding their bill. QR links on SMS reminders can work particularly well, within a few clicks the customer can have the bill settled or can contact their account manager. Integrated Voice Recording (IVR) Campaigns allow a pre-recorded message to be sent to your customers with clear options like press 1 to pay, press 2 if you are experiencing difficulties paying, press 3 to speak to an operator. Many customers prefer not having to speak directly to anyone particularly at the reminder stage and find it more convenient to self-serve. Interactive SMS communication enables two-way communication via SMS where customers are routed to a live agent. Live web chat provides a convenient way for your customer to get the answers they need without having to pick up the phone.

AssistAssistance for Vulnerable Customers At the time of writing and according to the Australian Debt Clock, Australia's household debt sits at 190% of disposable income. In other words, for every $1 saved, the average Aussie owes $3. This is the highest level of household debt in recorded history.(4)* In the current environment vulnerable customers should have access to third party assistance where required and companies should have detailed hardship policies and strategies in place to assist the customer in clearing their debt. The most effective hardship programs don't just apply credits and write offs, as whilst appropriate in certain cases, a more sustainable solution is required to provide support to customers to pay off their debt and to educate them to ensure they don't end up in the same position again. Most customers would prefer to be given the tools to help themselves as this is ultimately more satisfying and more beneficial long term.

SupportIt is essential that the correct support is provided to customers when required whether that is support that can be provided internally or externally. Any employees directly interacting with your customers should be genuinely listening and gaining a true understanding of the customer's situation and ability to repay the debt, ensuring any arrangements entered into are a true reflection of what they can afford. They should also be aware of the trigger words that could indicate a financial or emotional hardship and respond with appropriate help and support. Words such as unemployed, bereaved, pensioner and illness for example should be flagged as an indicator that the customer is potentially having difficulties in meeting the payment and may require further support. Your team should have easy access to third party assistance if required in the form of financial counselling or emotional support.

EducateHave clear guidelines detailing what you expect from your customer and ensure that the fair and reasonable consequences of not fulfilling these requirements are communicated. To a certain extent your customers will treat you how you allow them to, consistency in your approach is the key.

 Have a clear collection strategy that is followed every month with set workflows determining the issuing of reminders and final notices and referral to external collection agencies. Have clear and concise invoices with a choice of different payment options. Encourage engagement at an early stage to identify any potential disputes and to ensure that your customers are made aware of the consequences of non-payment eg. freezing the account, disconnection, collection escalation action. If you don't have the resources to accommodate this then outsource this early reminder work.

How do you ensure your outsourced partners can apply customer centric collections?Not too long ago you would have been hard pushed to find the words collection agency and customer centricity in the same sentence. Customer Centricity for us in the collections business is twofold as it applies not just to our clients but to their customers, the end users of our service. With so many major brands embracing customer centricity, it is increasingly important for collection agencies to adopt a customer centric approach themselves. Often viewed as an extension of the clients' organisation, it is important that the values and approaches of collection agencies are closely aligned to them.Interestingly, adopting a customer centric approach has consistently been shown to increase collections, creating a win/win or rather a win/win/win for the client, their customer and the agency. A collection call doesn't have to be viewed as a battle where either the debtor or collector are victorious but rather a customer centric interaction where you can assist the customer to clear their debt and improve their cash flow, whilst also increasing collections for the client. It is a shift in mindset and culture and most collection agencies now will refer to the 'customer' as opposed to the 'debtor' which can have negative connotations. This all ties in with agents keeping an open mind; you are not 'collecting from a debtor' but 'assisting a customer'. This approach is a lot more positive, and as such, has a higher chance of a better outcome for all parties.

So, for an outsourcing partner that can mirror your customer centric approach, how do you assess how customer centric a collection agency is?

1. Do they facilitate call calibration sessions where both parties can score calls according to predetermined requirements?2. Instead of focussing only on dollars collected, are there also KPI's in place for quality conversations and assistance and support for customers?3. Do they have a dedicated and specialised hardship division that can immediately assist with vulnerable customers?4. Can they provide a range of digital solutions to engage your customer including customer self-serve options, smartphone friendly solutions, Interactive SMS/IVR services, QR links.5. Are they socially responsible? Do they give back to the community?6. Do they listen properly to your needs and tailor services specifically?

Ultimately, the modern day collections team, whether internal or external, needs to help customers better manage their money and clear their debt; better inform customers about their existing debt; assist customers to resolve outstanding account issues and strive to improve overall value for customers to ensure repeat business and long standing mutually beneficial relationships. Nail this, and it will increase cash flow for your business as well as clearing debt and freeing up cash flow for your customers, creating peace of mind and encouraging brand loyalty.

Nikki Dennis is Sales Director at Australian Receivables Limited (ARL) and can be contacted on 0437 652 562 or nikkidennis@arlcollect.com.au. ARL is a leading national collection agency, assisting many major companies across key industry sectors with their customer centric collections.